Leather and Leather Products

One of the largest shoe exporters in China – Huajian – set up a factory in Ethiopia in 2011, as part of a plan to invest US$2 billion over 10 years in developing manufacturing clusters focused on shoemaking for export. The company produces shoes for brands such as Guess and Calvin Klein, and hopes to see its exports from Ethiopia reach US$4 billion within ten years.
Source: Deloitte, “Ethiopia, a Growth Miracle,” 2014; Centre for Economic Policy Research, “PEDL Research Note: The Role of Foreign Investment in Ethiopia’s Leather Value Chain”, 2013

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Overview of the sector

The sector is one of the leading manufacturing sectors for Ethiopia.

Currently, Ethiopia is exporting mainly finished leather followed by growing shoe exports. Other leather items including gloves, bags and small leather articles have a large potential for exponential growth.

The recent expansion in leather gloves production is proof of existing capacity as well as the potential to export with a steady growth of volume and value.

More than 75 domestic and foreign leather and leather product factories have invested in Ethiopia.

Export of leather, which was US $ 23 million in 2013 reaches US $ 133 million in 2018.

Policy and Strategy

In the GTP II, the leather sector export and employment target by 2020 is USD 800 million and 59,580, respectively,

Since 2012, the government has discouraged export of hides and skins to boost exports of value-added products.

Key Reasons for Investing

Ethiopia has a cattle population of more than 53 million, and sheep and goat population of 25.5 and 24.1 million, respectively. This makes Ethiopia the 1st from Africa and the 9th from the world in its cattle population which enable the country to have a strong raw material base for the leather industry.

Only 50% of hides and skins potential are being utilized currently.

Ethiopia has a potential for price competitive and quality supply of skins and hides: The Ethiopia highland sheepskins have got a worldwide reputation in terms of quality, thickness, flexibility, strength, compact structure, and a clean inner surface.

Investment Opportunities

Tanning of hides and skins up to finished level;

Manufacturing of luggage (such as handbags), saddle and harness items, footwear, and garments; and

Useful Links

Otto Kessler, a German company specializing in the production of top quality leather gloves for fashion brands, department store chains, select catalogue companies, and military & police authorities in Europe, North America, and Japan established a leather processing plant in Gondar, within the Amhara Region.

The Japanese manufacturer Hiroki Co. Ltd is setting up a US$400,000 manufacturing operation in Ethiopia, where it will produce shoes and other luxury accessories made from leather. Hiroki is already training Ethiopian workers at its Chinese plant, and has brought experts from Japan to train the rest of the staff in Ethiopia.
"We decided to open a factory in Ethiopia because of the availability of quality leather raw material," said Youngil Song, president of Hiroki Addis. "It is one of the finest leather in the world."
Source: Leather International, “Japanese manufacturer in Ethiopia”, 5 February 2014; Deloitte, “Ethiopia, a Growth Miracle,” 2014

Hong Kong’s New Wing Group is a smaller firm producing women’s shoes for American and European markets. New Wing sources most of its leather from Ethiopia and plans to establish its own tannery for refining processing.
Source: Centre for Economic Policy Research, “PEDL Research Note: The Role of Foreign Investment in Ethiopia’s Leather Value Chain”, 2013